Rabobank Global Pork Quarterly Q1: Little Room for Upside
The global pork market will remain weak in Q1 2016, followed by some—partly seasonal—improvement leading into Q2. Sufficient supply and modest demand development mean the Rabobank five-nation hog price index will bottom out in the coming months, at the lowest point since 2006, after a stronger-than-expected drop at the end of 2015, according to the Rabobank Global Pork Quarterly Q1 report.
“Recent positive demand and price developments in importing countries will start to support prices in exporting countries during Q1”, says Albert Vernooij, analyst Animal Protein at Rabobank.
China’s market will remain elevated
In China, imports are expected to further increase, supported by strong domestic prices and further destocking of the herd in 2016, driven by stricter environmental regulations. The level of China’s imports and relative competitiveness of major exporters is a major dynamic in 2016.
US exports will determine price level
In the US, industry expansion is expected to slow after near-record supply growth in 2015, while packers’ margins will remain strong due to limited available capacity. Exports are expected to pick up, supported by low prices, mCOOL repeal and relisting of plants for export to China.
Private storage is the key to EU recovery
EU pork market recovery during the first weeks of 2016 will reverse in the coming weeks, after the suspension of the European Commission’s Private Storage scheme on 21 January. Reopening of the scheme will be critical for further market support.
Brazil’s positive scenario will continue
In Brazil, the market is forecast to follow the steady path of Q4 2015 due to continuing good domestic and export demand. This will, however, not result in higher prices due to the challenging domestic economy and low international prices.